Recent Development

The Council of Ministers issued two new state of emergency executive orders (Nos. 675 and 676) ("Executive Orders") on October 29, 2016. Additionally, Law No. 6749 Approving the Executive Order regarding the Measures Implemented during the State of Emergency (“Law”) was introduced. The Law does not specify which executive order is approved; however, provides an outline of measures to be implemented for individuals and certain institutions and organizations that were closed during the state of emergency.

Both Executive Orders and the Law amend several laws and regulations related to jurisdiction, national security, education and public officials; introduce new rules related to corporations, institutions, radio, TV channels, newspapers, journals, publishing houses and distribution channels that were closed down by the previous executive orders; close down further institutions, hospitals, student residencies, associations, foundations, universities, unions, federations and confederations linked to the Fethullah Terrorist Organization ("FETO")[1]; and discharge certain members of the military, police and other public officials[2] linked to the FETO.[3]

New measures

  • Appointing trustees: In companies where less than 50% of shares are owned by those linked to the FETO, the Saving Deposit Insurance Fund (TMSF) ("SDIF") will be appointed by the courts as trustee to manage and represent these shares.
  • Proceedings related to closed institutions initiated before August 17, 2016:
    • The lawsuits initiated against corporations, institutions, radio, TV channels, newspapers, journals, publishing houses and distribution channels closed down by the previous executive orders within the scope of the state of emergency and their owners before August 17, 2016, and the claims addressed to the Undersecretariat of Treasury (“Treasury”) and the Directorate General of Foundations (Vakıflar Genel Müdürlüğü) (as transferees) will be dismissed due to lack of cause of action. These decisions will be automatically rendered by the relevant courts and will be served to the claimants.
    • The execution and bankruptcy proceedings initiated before August 17, 2016, against the abovementioned legal entities and individuals, and the claims addressed to the Treasury and the Directorate General of Foundations (as transferees) will be dismissed by executions offices.
    • Each party will bear the expenses related to these lawsuits, execution and bankruptcy proceedings incurred until the dismissal.
    • The claimants can apply to the Ministry of Finance or the General Directorate of Foundations within 30 days starting from the date of the dismissal decision's receipt. The claimants can initiate lawsuits before the administrative courts against the Ministry of Finance's or the General Directorate of Foundations' decision.
  • Proceedings related to closed institutions initiated after August 17, 2016:
    • Lawsuits, execution and bankruptcy proceedings initiated against the abovementioned legal entities and individuals, the Treasury and the Directorate General of Foundations after August 17, 2016, will be dismissed by execution offices and courts.

Conclusion

Any receivables or claims initiated against closed institutions or their owners will be subject to the procedures provided under the Executive Orders and the Law. Accordingly, companies with receivables from these institutions should analyze each receivable, lawsuit or proceeding on a case-by-case basis, and determine a roadmap going forward.

We will keep you posted of any further developments regarding extraordinary measures. [3] This alert does not include all aspects of the Executive Orders and the Law; interested parties should review the entire Executive Orders and the Law for their own assessment.